THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Thursday, April 30, 2020

The “Invisible Hand” Redux

In the previous posting on this subject, we started looking at the “Invisible Hand” of the much-excoriated Adam Smith, and realized that at least some of what Smith was accused of really had no basis in fact.  Interestingly, a fact we didn’t bring up is that, while Smith is generally portrayed as some kind of “High Priest of Capitalism” on the strength of a rather profound misunderstanding of his Invisible Hand argument, it turns out that he was actually far more labor-oriented than people suppose.
"I LOVE technology!"
Smith was, in fact, much more concerned about the role of labor and non-owning workers than is usually acknowledged.  He really didn’t pay too much attention to capital and its owners, except to note that they were often fools for thinking that technology could ever replace human beings as either moral or economic agents!
No, really.  It’s in Smith’s Theory of Moral Sentiments.  Admittedly, this blindness toward the effect of technology is particularly remarkable in Smith as he wrote at the beginning of the Industrial Revolution and was already seeing some of the effects.
Nevertheless, Smith expounded at some length on a crucial observation.  This is the fact that the rich can either satisfy their wants and desires for that which is above the common or the bare necessaries by hiring servants, buying the labor productions of others, or purchasing technology.  As he said,
How many people ruin themselves by laying out money on trinkets of frivolous utility?  What pleases these lovers of toys is not so much the utility, as the aptness of the machines which are fitted to promote it.  All their pockets are stuffed with little conveniencies.  They contrive new pockets, unknown in the clothes of other people, in order to carry a greater number.  They walk about loaded with a multitude of baubles, in weight and sometimes in value not inferior to an ordinary Jew’s-box, some of which may sometimes be of some little use, but all of which might at all times be very well spared, and of which the whole utility is certainly not worth the fatigue of bearing the burden. (Smith, The Theory of Moral Sentiments.  Book IV, Chapter I, §6.)
G.K. Chesterton
Of course, to Smith (in stereotypical Scots fashion), anything above the necessaries of life was to be considered “frivolous,” for, “[t]he rich man consumes no more food than his poor neighbor. . . . The desire of food is limited in every man by the narrow capacity of the human stomach; but the desire of the conveniencies and ornaments . . . seems to have no limit or certain boundary.” (Smith, The Wealth of Nations.  Book I, Part xi, Chapter 7.)  He compared the urge of the rich to surround themselves with servants and employees as a similar manifestation of the desire for convenience and ostentation.
Agreeing with G.K. Chesterton (sort of), Smith reasoned that employing numbers of people is to be preferred over ownership of technology because it adds the moral sentiment of approbation both from those employed (probably out of gratitude for their employment) and from others in recognition of the employer’s status as a rich and beneficent employer (Smith counted beneficence as a moral sentiment, somewhat analogous to an admixture of charity and justice).  The purchaser of technology is seen as a figure to be ridiculed (much like the “computer nerd” of today), and so is not due the same sentiment of approbation as the employer of hundreds who provide him with the same utility and convenience as that supplied by technology to its owner.
But labor?
Absolutely.  As Smith explained in The Theory of Moral Sentiments,
Yup.  That's the guy.
It is to no purpose, that the proud and unfeeling landlord views his extensive fields, and without a thought for the wants of his brethren, in imagination consumes himself the whole harvest that grows upon them. The homely and vulgar proverb, that the eye is larger than the belly, never was more fully verified than with regard to him. The capacity of his stomach bears no proportion to the immensity of his desires, and will receive no more than that of the meanest peasant. The rest he is obliged to distribute among those, who prepare, in the nicest manner, that little which he himself makes use of, among those who fit up the palace in which this little is to be consumed, among those who provide and keep in order all the different baubles and trinkets which are employed in the oeconomy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species. When Providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition. These last, too, enjoy their share of all that it produces. In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them. In ease of the body and peace of the mind, all the different ranks of life are nearly upon a level, and the beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.
Ordinarily we wouldn’t have relied on such an extended quote, but it is essential to give the context — and Smith’s actual words — when pointing out that he seemed far more concerned with the owners of labor than with the owners of capital.  To make our case, we need only point out two items from the above passage:
·      The rich are described as “proud and unfeeling,” consumed with “selfishness and rapacity,” and clearly labeled inhumane and unjust, intending nothing other than “the gratification of their own vain and insatiable desires,” and yet,
·      The rich are forced to act in a manner that benefits others in order to satisfy their own desires, regardless how selfish or inordinate, for (in Smith’s opinion) they can do so only through the labor of others, thereby resulting in a distribution of the necessities of life equivalent to that which would have occurred had the Earth been equitably divided among everyone.
Of course, there is an enormous flaw in Smith’s argument, but it wasn’t because he took the part of the rich against the poor.  Exactly the opposite, in fact, as we will see when we look at this subject again.